Belgian plastics and rubber industry confronted by sharp resin increases in 2012 after a strong 2011

After a strong year 2011, the Belgian plastics and rubber industry is confronted by sharp resin price increases. Maintaining margins is priority number 1 for the near future. More expensive energy and resources will stimulate in the long term the demand for plastics. At its general meeting, Federplast.be, the Belgian Association of Manufacturers of Plastic and Rubber Products, released the results of a survey of its members. The production volume of the plastics and rubber industry in 2011 experienced a growth of 3.7%. For 2012, 40% of general managers foresee future growth while nearly 1/3rd expect stabilization. Employment increased by 1.6 %. In the first 2 months the prices of commodity plastics such as polyolefins and polystyrene increased by 11 to 16 %. As the raw materials are by far the biggest cost factor for plastics and rubber converters, these increases will in general lead to higher prices for all kind of plastic and rubber products Federplast.be represents the Belgian companies that process plastics and rubber affiliated with Agoria, the Belgian federation of the technology industry, and essenscia, the Belgian federation for chemistry and life sciences. The sector of the plastic and rubber products manufacturers is largely dominated by SME companies, with an average size of 45 workers. With the production of plastic and rubber materials included, the plastics and rubber industry within Agoria, essenscia and Federplast.be represents some 314 companies, 34,000 employees and a total turnover of 16.6 billion euros. With an export surplus of 11.2 billion euros, the plastics and rubber industry is the primary contributor to the Belgian trade balance. The plastics and rubber converters recorded, after a growth of 5.7 % in volume in 2010, a further growth of 3.7 % in 2011 and even of 13 % in turnover. Although employment has grown by 1.6 %, 86 % of the businesses managers expect stable or decreasing employment for 2012. The Belgian plastics and rubber processors fear a significant erosion of margins due to the sharp increase in polymer prices. Since the beginning of the year, the prices of commodity plastics have risen steadily, from 11 to 16 % in only 2 months’ time. The explanation lies in the price evolution of oil and naphtha (+27% since October 2011) and the strengthening of the dollar compared to the euro. The forecasts indicate further increases in raw material prices for the coming months, which may affect the cost of packaging, construction products, technical parts and consumer goods using plastics and rubber. The future of plastics and rubber converters would be jeopardized if they could not transfer these increasing costs to the customers who are benefitting from plastics’ contribution to the reduction of energy consumption, transport costs and heating fuel bills. More expensive energy and raw materials are certainly a threat in the short term, but they offer also new opportunities to the industry. The long term trend of more expensive and less available resources stimulates further recycling developments. This incited Federplast.be to submit a project proposal to the Flemish Enterprise Agency, together with the waste recovery industry association (Febem), the Flemish Plastics Technology Center (VKC) and the Belgian Textiles Technology Center (Centexbel) to study the opportunities for converting textiles waste into raw materials for the plastics industry and vice versa.